Midwest gasoline sees more problems, but could be worse

Midwest Nightmare

While the rest of the country is enjoying relative calm when they pull up to the gas pump, the Midwest nightmare continues. The Energy Information Administration reported in their weekly supply report that the stocks of gasoline hit the highest level for this time of year since 1992. The EIA reported that gasoline supply increased 3.65 million barrels in the latest week while crude supply increased by 1.57 million barrels and crude by 18,000 barrels. That helped the RBOB wholesale gasoline futures hit a six-month low. Now normally that would be cause for celebration, yet once again gasoline buyers in the Midwest never seem to get a break. Just as hopes were being raised that indeed we could see gas prices start to fall, a storm packed with massive amounts of rain and spectacular lightening cut the power to the CITGO refinery in Lemont, Illinois, the latest in bad news for Midwest drivers.

While Chicago is thrilled with being the World Champions of hockey, it is tired of being number one in gasoline prices. James Tae of MSN Autos on the MSN news site gives us a spin around the globe to help at least some feel better about their gasoline prices or perhaps worse. He writes that "With the onset of the summer driving season, the average price of a gallon of gas in America went up 10.4 cents in May — the first increase since February. With the average gallon approaching the $4 mark, drivers coast to coast will feel the pinch over the next few months. It's easy to focus on where gas might be cheaper, but the grass isn't always greener on the other side. Here's a look at gas prices around the world and across the United States, from least to most expensive, in early June 2013.” These are a few examples, the full list can be found at MSN Autos.

Venezuela: 10 cents a gallon. That gas price above is not a typo. Thanks to government subsidies put in place by the late President Hugo Chavez, gas prices have been frozen for nearly 15 years. The policy made Chavez extremely popular in Venezuela, but could collapse the country's economy in the wake of his death. The harsh realities of inflation will at last come to affect Venezuelan gas prices, and though the country is a major oil exporter, the high spending rate of the Chavez regime left it strapped for cash. The price for a gallon of gas in Venezuela is a textbook.

South Carolina: $3.19 a gallon - South Carolina currently has the lowest average gas price of all 50 United States. The combination of nearby refineries in Alabama that provide a steady supply of oil with South Carolina's low gasoline taxes keeps the price down, but South Carolinians hard hit by the economy are spending a greater percentage of their income on gas than residents of any state other than Mississippi.

Chicago: $4.44 a gallon - The Second City currently holds the title for the highest gas prices in the United States. Beyond the higher cost of everything in a major urban area, Environmental Protection Agency regulations require special summer gasoline formulas for much of the Midwest, driving prices even higher. Chicago's gas prices are 38 cents higher than this time in 2012, and there's no relief in sight. In fact, they might go higher still.

China: $4.74 a gallon - China is already the second-biggest oil consumer in the world behind the United States, and with an emerging middle class it should only use more in the coming years. Middle class doesn't translate to wealthy, however. In spite of government subsidies to keep gas and diesel relatively low, Chinese citizens still suffer at the pump in proportion to the rest of the world.

United Kingdom: $8.06 per gallon - For Americans, the United Kingdom has always been the go-to example for how things could always be worse when it comes to the cost of gas. This is the case now more than ever. Rising crude oil prices and higher fuel taxes have contributed to a surge in gas prices in the U.K. over the past decade. Prices aren't as high as in other European countries, but the increase over time is hurting citizens in the U.K. as much as any other.

Turkey: $9.89 per gallon - Wherever you fill up, as long as you're not in Turkey, it could always be worse. Even before the onset of recent turmoil in the country, Turkey's fuel prices were punitive. The reason? A good chunk of the population pays no taxes at all, so increasing the fuel tax has become a way for the Turkish government to make up its budget deficit gap.

About the Author

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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